Hi guys
Following is my cwk essays on knowledge management. I think it can help answer question 4.
Feel free to add changes or comments
Intellectual capital, knowledge management and competitive advantage
Companies combine resources to operate and sustain their business. Tangibles and intangibles are the two types of assets. Tangible assets are buildings, machinery, computers, and other physical capital (physical means of transport), physical energy (coal, oil, etc.) and physical ‘labour ‘force’ (Andersen and Striukova, 2004). Intellectual capital which is related to intangible assets can be split into four categories: Market assets[1] , Intellectual property[2] (IP), human-centred assets[3], infrastructure assets[4] (Brooking, 1998). Intellectual capital which is not new and was referred as goodwill by Brooking (1998:12) has always been part of supplier-customer relationship. It is rather the importance management has given to intellectual capital which has grown. With companies such as Apple (for electronic devises) emerging and well competing the big Microsoft, companies realise that even with exclusivity competitors can still come up with substitutes. And it is now extremely difficult for an organisation to solely rely on production advantage because “the liberalisation and expansion of markets both domestically and internationally” has reduced the costs of transferring technology or relocating (Teece, 2000:35). As stated Kessels (2001:497) “our society is gradually moving towards a knowledge economy: an economy in which the application of knowledge replaces capital, raw materials, and labour as the main means of production”. So it is imperative for firms operating in today’s environment to be able to “develop core competencies by gathering information, generating new knowledge, disseminating, and applying this knowledge to improve and innovate processes, products, and services”. So let’s look at the actual benefit and implications of knowledge for management and the production process.
Implications of knowledge management and production
Based on what was said earlier, organisations’ in the new economy have to be able to sense and seize opportunities quickly and manage them proficiently (Nonaka, 1994). For example, when Ford (US) needed to manufacture smaller cars for its US customers, “it turned to its European subsidiaries for help. The subsidiaries transferred design and production groups to the US to help establish small car design and manufacturing competence in North America”. (Teece, 2000:36). And for Garvin (1993) organisations cannot continuously improve their production and processes without a required commitment to learning. Senge (1990) described learning organizations as places "where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together." Learning organizations are skilled at five main activities: systematic problem solving, experimentation with new approaches, learning from their own experience and past history, learning from the experiences and best practices of others, and transferring knowledge quickly and efficiently throughout the organization” (Garvin, 1993:81). During those activities, methods - such as: written, written, oral, and visual reports, site visits and tours, personnel rotation programs, education and training programs, standardization programs, surveys, questionnaires, and interviews- can be used to enhanced and trace learning(Garvin, 1993). It is now clear that knowledge can be embedded[5] in various locations[6], which is the reason why knowledge management requires organisations to design programs or arrange activities that will exploit the value of that knowledge to its fullest. Nonaka (1994) proposed practical model[7] for managers to implement more effective knowledge creation.
Kessels (2001:502) also provided the corporate curriculum which is a “framework for the learning functions that promote the ability to signal relevant information, to create new knowledge and to apply this knowledge to step by step improvement and radical innovation of work processes, products and services”.
But even with the most accurate model of knowledge management, organisations will fail to capture the value of knowledge if factors[8] impacting knowledge management are not taken into consideration.
Source: Teece, D. (1998)
Knowledge embedded in individuals for example has a tacit dimension which is not only difficult to codify but also carry risk of spill over once the information is readable (Andersen and Striukova, 2004). Knowledge assets include tacit and codified know-how, both technical and organisational. "Explicit or codified knowledge refers to knowledge that is transmittable in formal, systematic language, and tacit is deeply rooted in action, commitment, and involvement in a specific context (Nonaka, 1994; Polanyi, 1966). Managers can use “socialization, combination, externalization, and internalization” to convert knowledge and create value for their organisations (Nonaka, 1994). But managers need to understand that “individual knowledge is enlarged through interaction between experience and rationality, and crystallized into a unique perspective original to an individual” (Nonaka, 1994:22). Organizational learning will only happen if individuals involved in the process are committed and actually perceive any personal benefit. Now to avoid misappropriation of knowledge assets, managers can also choose to “protect them by the instruments of intellectual property such as trade secrets, copyrights and patents” (Teece, 2000:35). Information is also an important aspect of knowledge management as it is a flow of messages or meanings which might add to, restructure or change knowledge. So there is a need and an opportunity to match information and knowledge requirements because if knowledge is not supplied to the right people at the right time then it not only wasted but could also be costly (Teece, 2000:36). For example there was a funny story in October 2009 about Pepsi hit with $1.26 billion default judgment after its secretary, too busy arranging a meeting, put letter aside, and forgot about it. http://www.ontechnologycontracts.com/2009/10/pepsi-hit-with-1-26-billion-default-judgment-lawyers-secretary-was-distracted-put-letter-aside-and-forgot-about-it/. Moreover unless the knowledge created is used to process or produce a product or service does not have any signif9icant value (Teece, 2000). If Microsoft invents a new software which is incompatible with its workstation then the resource generate to produce that know-how is actually wasted. So the value of knowledge will vary according to where it is embedded. Hence depending on the factors, the value of knowledge might vary in favouring organisational sustainable position.
Following is my cwk essays on knowledge management. I think it can help answer question 4.
Feel free to add changes or comments
Intellectual capital, knowledge management and competitive advantage
Companies combine resources to operate and sustain their business. Tangibles and intangibles are the two types of assets. Tangible assets are buildings, machinery, computers, and other physical capital (physical means of transport), physical energy (coal, oil, etc.) and physical ‘labour ‘force’ (Andersen and Striukova, 2004). Intellectual capital which is related to intangible assets can be split into four categories: Market assets[1] , Intellectual property[2] (IP), human-centred assets[3], infrastructure assets[4] (Brooking, 1998). Intellectual capital which is not new and was referred as goodwill by Brooking (1998:12) has always been part of supplier-customer relationship. It is rather the importance management has given to intellectual capital which has grown. With companies such as Apple (for electronic devises) emerging and well competing the big Microsoft, companies realise that even with exclusivity competitors can still come up with substitutes. And it is now extremely difficult for an organisation to solely rely on production advantage because “the liberalisation and expansion of markets both domestically and internationally” has reduced the costs of transferring technology or relocating (Teece, 2000:35). As stated Kessels (2001:497) “our society is gradually moving towards a knowledge economy: an economy in which the application of knowledge replaces capital, raw materials, and labour as the main means of production”. So it is imperative for firms operating in today’s environment to be able to “develop core competencies by gathering information, generating new knowledge, disseminating, and applying this knowledge to improve and innovate processes, products, and services”. So let’s look at the actual benefit and implications of knowledge for management and the production process.
Implications of knowledge management and production
Based on what was said earlier, organisations’ in the new economy have to be able to sense and seize opportunities quickly and manage them proficiently (Nonaka, 1994). For example, when Ford (US) needed to manufacture smaller cars for its US customers, “it turned to its European subsidiaries for help. The subsidiaries transferred design and production groups to the US to help establish small car design and manufacturing competence in North America”. (Teece, 2000:36). And for Garvin (1993) organisations cannot continuously improve their production and processes without a required commitment to learning. Senge (1990) described learning organizations as places "where people continually expand their capacity to create the results they truly desire, where new and expansive patterns of thinking are nurtured, where collective aspiration is set free, and where people are continually learning how to learn together." Learning organizations are skilled at five main activities: systematic problem solving, experimentation with new approaches, learning from their own experience and past history, learning from the experiences and best practices of others, and transferring knowledge quickly and efficiently throughout the organization” (Garvin, 1993:81). During those activities, methods - such as: written, written, oral, and visual reports, site visits and tours, personnel rotation programs, education and training programs, standardization programs, surveys, questionnaires, and interviews- can be used to enhanced and trace learning(Garvin, 1993). It is now clear that knowledge can be embedded[5] in various locations[6], which is the reason why knowledge management requires organisations to design programs or arrange activities that will exploit the value of that knowledge to its fullest. Nonaka (1994) proposed practical model[7] for managers to implement more effective knowledge creation.
Kessels (2001:502) also provided the corporate curriculum which is a “framework for the learning functions that promote the ability to signal relevant information, to create new knowledge and to apply this knowledge to step by step improvement and radical innovation of work processes, products and services”.
But even with the most accurate model of knowledge management, organisations will fail to capture the value of knowledge if factors[8] impacting knowledge management are not taken into consideration.
Source: Teece, D. (1998)
Knowledge embedded in individuals for example has a tacit dimension which is not only difficult to codify but also carry risk of spill over once the information is readable (Andersen and Striukova, 2004). Knowledge assets include tacit and codified know-how, both technical and organisational. "Explicit or codified knowledge refers to knowledge that is transmittable in formal, systematic language, and tacit is deeply rooted in action, commitment, and involvement in a specific context (Nonaka, 1994; Polanyi, 1966). Managers can use “socialization, combination, externalization, and internalization” to convert knowledge and create value for their organisations (Nonaka, 1994). But managers need to understand that “individual knowledge is enlarged through interaction between experience and rationality, and crystallized into a unique perspective original to an individual” (Nonaka, 1994:22). Organizational learning will only happen if individuals involved in the process are committed and actually perceive any personal benefit. Now to avoid misappropriation of knowledge assets, managers can also choose to “protect them by the instruments of intellectual property such as trade secrets, copyrights and patents” (Teece, 2000:35). Information is also an important aspect of knowledge management as it is a flow of messages or meanings which might add to, restructure or change knowledge. So there is a need and an opportunity to match information and knowledge requirements because if knowledge is not supplied to the right people at the right time then it not only wasted but could also be costly (Teece, 2000:36). For example there was a funny story in October 2009 about Pepsi hit with $1.26 billion default judgment after its secretary, too busy arranging a meeting, put letter aside, and forgot about it. http://www.ontechnologycontracts.com/2009/10/pepsi-hit-with-1-26-billion-default-judgment-lawyers-secretary-was-distracted-put-letter-aside-and-forgot-about-it/. Moreover unless the knowledge created is used to process or produce a product or service does not have any signif9icant value (Teece, 2000). If Microsoft invents a new software which is incompatible with its workstation then the resource generate to produce that know-how is actually wasted. So the value of knowledge will vary according to where it is embedded. Hence depending on the factors, the value of knowledge might vary in favouring organisational sustainable position.
End Notes
[1] The diagram below give a wide view of those factors but we will only pay attention to one two of them just to draw our point.
[1] The potential an organization has due to market-related intangibles (various brands, customers and their loyalty, repeat business, backlog, distribution channels, various contracts and agreements such as licensing franchises and so on).
[2] Include know-how, trade secrets, trade service marks, copyright, patent and various design rights.
[3] Comprise the collective expertise, creative and problem solving capability, leadership, entrepreneurial and managerial skills embodied by the employees of the organization.
[4] Technologies, methodologies and processes which enable the organization to function.
[5] See appendix for more details on knowledge location in other resources
[6] Knowledge is embedded in operating rules and practices, in customer, in supplier and competitor databanks, and in the company's own history.
[7]See appendix for other management models proposed by Nonaka
[8] The diagram below give a wide view of those factors but we will only pay attention to one two of them just to draw our point.
[1] The diagram below give a wide view of those factors but we will only pay attention to one two of them just to draw our point.
[1] The potential an organization has due to market-related intangibles (various brands, customers and their loyalty, repeat business, backlog, distribution channels, various contracts and agreements such as licensing franchises and so on).
[2] Include know-how, trade secrets, trade service marks, copyright, patent and various design rights.
[3] Comprise the collective expertise, creative and problem solving capability, leadership, entrepreneurial and managerial skills embodied by the employees of the organization.
[4] Technologies, methodologies and processes which enable the organization to function.
[5] See appendix for more details on knowledge location in other resources
[6] Knowledge is embedded in operating rules and practices, in customer, in supplier and competitor databanks, and in the company's own history.
[7]See appendix for other management models proposed by Nonaka
[8] The diagram below give a wide view of those factors but we will only pay attention to one two of them just to draw our point.
